Site Search Navigation

Site Navigation

Site Mobile Navigation

Nate Silver, Guest Ethicist

By Ariel Kaminer May 16, 2011 4:14 pmMay 16, 2011 4:14 pm

Not long ago, the magazine published an article about how to avoid paying full price for air travel. Several readers wrote in to say the proposed method amounted to lying, and asked what I thought about the ethics of such an approach.

I write the magazine’s Ethicist column, but Nate Silver wrote the article that ruffled so many readers’ feathers, so I put the question directly to him.

Is it unethical to deceive an airline? Do passengers have an obligation to use their tickets in the way they were intended to? Or is all fair when it comes to price wars?

Here is his response:

Let me start by saying that I’ve never actually taken advantage of this “trick” myself. It’s rarely worth the headache when you’re flying out of New York, which is served by all the major carriers as well as by JetBlue, Virgin America and Southwest. If a passenger can’t find a decent airfare in New York — without bending the airlines’ rules — he’s usually not looking hard enough.

Other cities, however, offer the passenger much less choice. And this, I think, is where the ethical debate turns.

There is unambiguous evidence — both from my my own studies on this topic and from those conducted by academics and industry experts — that airlines charge passengers a significant premium when they dominate a route or an airport. When another airline like Southwest begins to fly a route that they hadn’t flown before, fares on all carriers drop significantly. Of course, this is all perfectly in line with economic theory.

These “hidden-city” ticketing opportunities arise, with few exceptions, because the airline is charging the passenger a premium to fly a route over which they exercise monopoly power. By booking a ticket into a more competitive market instead — but one which happens to have a layover in the hub city — the passenger can substitute a competitive fare for a noncompetitive one.

When a consumer is disadvantaged by monopoly pricing, I think there ought to be a strong presumption — legally and morally — that he or she is entitled to recourse. In theory, a citizen might have some alternative means of recourse in that he could choose to vote for elected officials who would pledge to ensure that the free market is functioning properly. There’s no doubt that much progress has been made in this area since the airline deregulation efforts of the 1970s and 1980s; the rise in airfares has been slow relative to the rate of inflation. At the same time, the major carriers have a lot of lobbying power, and they receive taxpayer subsidies of various kinds. And questions about which airlines fly which routes often turn on decisions made by local airport authorities, who are rarely elected to their positions.

Some people are nevertheless of the view that breaking the airlines’ ticketing rules — more technically, violating their Contract of Carriage — is intrinsically unethical. Even at Web sites like FlyerTalk.com, where savvy travelers trade tips on how to maximize their frequent flier mileage (sometimes by flying ridiculous routes), this is a controversial practice.

Sidestepping the larger argument about when and whether it is ever ethical to breach a contract, the Contract of Carriage is not typical. Unlike most contracts, it is not subject to any negotiation; the passenger clicks a button and — particularly when the carrier is the only one flying a route — has more or less no choice but to accept the rules as the airline dictates them. These are what are known as “adhesion contracts” and they have less legal force — and arguably, also, less ethical force.

When the passenger elects to book a hidden-city fare, it is tantamount to negotiating or renegotiating that contract, something he did not have the opportunity to do originally. The passenger is proposing that he’ll abide by all the terms of the Contract of Carriage but one — he won’t promise not to disembark at the layover airport. The airline still has the final say: it can choose whether to accept the new deal or to refuse his business.

One can argue that the passenger has a duty to expressly inform the airlines of his intentions. (Perhaps, when booking the ticket online, he could notate in the “special requests” field that he does not agree to abide by the relevant provision of the Contract of Carriage.) Given the circumstances under which these opportunities arise, however — the airline is exploiting both its monopoly pricing power and its asymmetrical power to negotiate the contract — I would argue that the passenger is on solid ethical footing provided that he does not mislead the airline if and when confronted about his strategy.

Bruce Grierson wrote this week’s cover story about Ellen Langer, a Harvard psychologist who has conducted experiments that involve manipulating environments to turn back subjects’ perceptions of their own age.Read more…